A and B are partners sharing profit and losses in the ration of 3:2.They admit C for 1/4th share,which he takes from 1/6th from A and 1/12th from B.Good will exists in book at Rs 2000.C brings Rs 18,000 as goodwill out of his share of Rs 30,000.Pass necessary journal entries for the above.
Answers
Explanation:
Cash a/c... Dr. 15000
To Premium for goodwill a/c 15000
(Being 60% of premium for goodwill brought in by C)
2. Premium for goodwill a/c... Dr. 15000
C's Capital a/c.... Dr. 10000
To A's Capital a/c 16667
To B's Capital a/c 8333
(Being C's share of goodwill distributed among the partners in the sacrificing ratio)
Working Note:
Calculation of sacrificing ratio:
A's sacrifice= 1/6
B's sacrifice= 1/12
Ratio= 2:1
Goodwill of the firm= 100000
C's share= 1/4 * 100000
= 25000
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